PAUL SCULPHER, co-director of Gaming Recruitment Solutions, dusts off the credibility of an antiquated payments system and asks if progress might actually signal the end of Mayfair’s world-leading exclusive casinos.
Anyone who works in the gaming industry can’t help but notice the bombardment we all get via LinkedIn and other avenues from payment processors, generally offering ever sketchier sounding solutions for online casino providers to help their clients deposit funds. However, there’s a world of trouble being caused at the very pinnacle of the market due to the imminent withdrawal of a far older payment method – cheques (checks to our American brethren).
While to most people, cheques are a distant memory – the last time I got one, I think it was a tax rebate years ago, and I had to go into an actual bank branch to deposit it, like some sort of caveman – they’re a key part of the UK high-end casino business.
Their use in casinos was ubiquitous years ago, before the 2005 Gambling Act came into force, where they were permitted by secondary legislation under strict rules. With no ATMs allowed, and before the days of debit cards, there was a period when most casino guests could use up to three cheques per day, backed by their “cheque guarantee card”, a concept from yesteryear. It was also permitted to set up a cheque cashing facility (CCF), which allowed larger cheques to be drawn by players, up to an agreed facility limit with strict rules on how that limit could be extended. It was possible to have “house cheques” which were in a blank chequebook, where the casino would fill in the account details for the player from their records, so they didn’t even need to remember their own chequebook.
The system was very effective, and indeed I remember, as a trainee dealer, the glorious pleasure of being plucked by a friendly pit boss from a tedious day shift to walk up to the bank and deposit the 20-odd cheques from the previous day’s trading. However even in those days, the cheque situation was much more fundamental to the existence of the Mayfair casinos, as it was the only practical way to access funds for gaming beyond carrying cash itself – obviously no joke when you’re into five figures and beyond.
Fast forward to the last five years, and the cheque element of the top-end casinos is critical. Mayfair and those associated high-end casinos of London are alongside the top destinations in the casino world, and with staggering sums changing hands, any friction in the flow of funds is going to be problematic, especially when dealing with people not necessarily known for their patient attitude to service issues.
The problem is that the processing of foreign cheques is already beginning to end, and, for example, RBS has closed accounts for some of the high-end casinos. Given that you, I and everyone we know outside casinos don't use cheques anymore, that kind of makes sense. However, this is going to cause an absolute disaster for the Mayfair casinos in terms of access for players to their own funds. You might well ask "So what? Every business has to adapt to the modern world." And well they should, but the anachronistic legislation does not allow it.
The implications are also wider than just the business of the people concerned. Consider that, pre-Covid, the last numbers publicly available for the “big six” top-end casinos (classified as Les Ambassadeurs, Crockfords, Aspinalls, Ritz, Maxims and the Clermont) showed their combined GGR was about a third of a billion pounds per annum, so straight away that’s well over £100m ($139m) in gaming duty per year. It’s not like the people who visit these sites only spend money in casinos too. This pinnacle of wealthy tourists tends to hang their visits around the casino option but they aren’t scared to spend money elsewhere in town during their stay, along with generally a pretty large entourage. There is also the employment these casinos offer, in a traditionally staff intensive hospitality environment of well over a thousand employees. Finally, if the perception is that these businesses are so wealthy that they can withstand any storm, bear in mind that the legendary Ritz casino is gone from Mayfair for good, closed in early Covid. No business is immune.
I spoke with David Livermore, legal and compliance director at Les Ambassadeurs Club, who told me, “The Mayfair casinos have operated for just a few days since the first lockdown in March and this sector is unlikely to open again until the summer. Even then, our high net worth customers may not return to the UK, certainly until they are confident in the travel arrangements and their ability to transact at our casinos when they arrive. It is extremely frustrating that we’ve been discussing what amounts to a minor change to the legislation with DCMS, Treasury and the Gambling Commission for over four years, and despite an agreement that it’s necessary and sensible, there has been no progress. The proposed change would allow the Gambling Commission to regulate all transaction methods, replacing the current outdated restriction that exists on the face of the Act. Without this adjustment, our customers will be unable to sensibly transact and are thus unlikely to come back to London at all. The loss of so many jobs and vital revenue for the UK, for the sake of a minor regulatory adjustment, would be irresponsible.”
It does seem that asking for a minor change in the legislation, to bring more methods of funding under the Gambling Commission purview, shouldn’t be that big a deal. While sympathy may be in short supply for these incredibly luxurious and exclusive properties, it certainly shouldn’t be for the staff who work there, and that’s before we even think about the nine-figure sum of tax raised annually by their players.
Paul Sculpher, Gaming Recruitment Solutions, and Independent Gaming Consultant.
Credit for this article goes to Gambling Insider.